Best Buy's Dividend Yield Looks Safe, But Free Cash Flow Trends and Tariff Headwinds Pose Risks

Best Buy has raised its dividend for 22 consecutive years, yielding 6.1% at $61.71. The earnings payout ratio is 57.2%, and free cash flow coverage is 1.57x, although it has declined from 1.72x the prior year and fell below 1.0x in FY2024. The dividend remains safe for now, but tariff headwinds or a disappointing AI PC replacement cycle could compress margins and threaten the dividend if free cash flow coverage falls below 1.2x.